{"id":325922,"date":"2023-12-03T00:20:20","date_gmt":"2023-12-02T16:20:20","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325922"},"modified":"2023-12-03T00:20:40","modified_gmt":"2023-12-02T16:20:40","slug":"stock-in-focus-wilcon-depot-wlcon-3-dec-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-wilcon-depot-wlcon-3-dec-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Wilcon Depot (WLCON) – 3 Dec 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>WLCON<\/td><\/tr>
Company Name<\/strong><\/td>Wilcon Depot Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>3 Dec 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 26.10<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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As it stands, although there is still solid upside to our current valuation, we would advise investors to look towards other names for now until such time that prospects start to show signs of improvement.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Walls remain closed on construction<\/h3>\n\n\n\n

Recently released data on approved building permits points to further erosion in demand for construction. On a YoY basis, statistics show a decline in both the total number of permits issued (-18.1%) as well as in the value of projects being approved (-4.4%). This indicates that not only is the interest in new private infrastructure
continuing to wane, but even the higher-value projects are not gaining any traction, despite the fact that they are typically more appealing due to their greater utility and
capital appreciation potential. When it comes to the residential side, the straw house gets completely blown down, with permit count (-24.8%), floor area (-24.1%), and value (-18.4%) all cratering year-on-year (YoY). Numbers such as this would indicate that the financial commitment needed in order to engage in home construction is still simply too heavy for buyers \/ prospective owners, as they grapple with the effects of higher lending rates.<\/p>\n\n\n\n

Bricks are piling up on WLCON<\/h3>\n\n\n\n

With 3rd quarter (Q3) results having disappointed once more, we note that the weakness in the construction sector does not bode well for the company. WLCON primarily caters to the finishing stages of construction, wherein customers place the final touches on their new homes by supplementing them with WLCON products. Given that the pipeline for new home construction is constrained however, this would likely further soften demand and all the more magnify the company\u2019s difficulties when it comes to the pace of its revenue growth vis a vis the expansion in its store OPEX. <\/p>\n\n\n\n

As such, we would not be surprised to see at least 2 more quarters of underperformance for WLCON given the troubled state of its target market. With these factors on hand, we are therefore reducing our Target Price by 15.0% to P26.10\/share, underpinned by the decrease in our EPS forecast (-5.5%) along with a 15% discount applied to the stock\u2019s historical PER, down to 28.7x, in light of the weaker outlook that we see for home retailing. <\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>